Between them, the Court of Appeal in Churchill v Merthyr Tydfil CBC and the Civil Procedure Rules Committee (CPRC) have wrought major changes to the relationship between mediation and civil justice since November 2023. Halsey no longer prevents judges from ordering mediation. As from October 2024, the overriding objective in CPR has been amended to make it clear (as much to the judiciary as to legal practitioners) that “dealing with cases justly” includes “promoting or using alternative dispute resolution”, and in CPR 1.4 the duty to manage cases is said specifically to include “encouraging or ordering” its use. Judges are specifically given powers to promote use of “ADR”[1] in CPR 3, 28 and 29. CPR 44 now makes explicit what the Court of Appeal in Dunnett v Railtrack held - as long ago as 2002 - that costs sanctions for unreasonable conduct may be imposed where “a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to participate in alternative dispute resolution proposed by another party.”
These changes all relate to civil proceedings once issued. Only the Part 44 power to penalise unreasonable conduct potentially relates to what happens in the pre-action period, in that CPR 44.2(5)(a) makes it clear that relevant “conduct” includes
conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol.
As courts can (and indeed have started) to order mediation in issued cases, it is in the pre-action period that consideration of offers to mediate and unreasonable refusal is most likely to arise. This shifts the focus to the pre-action protocols as the yardsticks for reasonable pre-action conduct, and these too are now the subject of suggested significant policy changes, this time as a result of the Civil Justice Council (CJC)’s Final Report on the Pre-action Protocols. This report has been published in two stages, the first phase in August 2023[2], and the second phase in November 2024. This article looks at both sets of recommendations. They are of course only recommendations which will have to be considered and approved (or not) by the CPRC. Given its workload and the detailed drafting as well as policy decisions that will need to be made, this is not going to happen quickly. But the direction of travel established by the Court of Appeal and the CPRC so far seems pretty clear and consistent, and given the clarity of CPR 44, parties are even in this interim period going to have to take their pre-action conduct very seriously over engaging in dispute resolution, or risk criticism and sanctions at the first CCMC from judges now fixed with unarguable responsibility to promote use of DRPs in claims which proceed to issue.
The current unrevised PAPs are not framed in mandatory terms as to observance of the machinery they establish. There is a good deal of use of words like “the steps that the parties are expected to take”. The current Practice Direction: Pre-action Conduct reads “Where there is a relevant pre-action protocol, the parties should comply with that protocol before commencing proceedings. Where there is no relevant pre-action protocol, the parties should exchange correspondence and information to comply with the objectives in paragraph 3, bearing in mind that compliance should be proportionate”. Those next steps involve letters of claims and response. But the most used verb in all the current PAPs is “should” and not “must”. When it comes to “ADR”, the requirements are even more gentle – parties are not told that they “should engage in ADR” but that they “should consider whether some form of ADR would be appropriate”. For instance this is the wording used in all the Injury PAPs. A judge might accept that brief consideration and rejection of a DRP by a party or parties fulfils this requirement. Of course the unrevised PAPs also tell parties that they “should” consider settlement at all times and that litigation “should” be a last resort. Apart from occasional provisions which allow for proceedings to be issued if a time limit is not met, the only disciplinary steps mooted in any PAP for dereliction in performance are possible costs sanctions for unreasonably failing to use a DRP.
However, there is very little evidence hitherto of judicial enforcement of PAP obligations after the issue of proceedings. For example, despite the fact that the Deputy District Judge in Churchill clearly disapproved of the way Mr Churchill’s claim had been handled, he felt (understandably) prevented by Halsey form ordering use even of a complaints process. Let alone mediation, but also (less understandably) from making an adverse costs order at this relatively early stage of the claim. The widespread use of the verb “should” in all PAPs - instead of the verb “must” which is widespread in the CPR – will have had much to do with judicial reluctance to penalise failure to comply with PAP obligations.
The CJC WG’s overall recommendation to change usage of “should” to “must” in almost all circumstances in the PAPs is the headline story from the two phases of their final report. Both of the draft PAPs appended to each phase report make it clear that its provisions “must” be observed before issuing proceedings (except in identified urgent cases) and both require parties to engage in a DRP, not merely to consider doing so.
So if the report’s recommendations are implemented – and in the light of Churchill and the amended CPR this is surely a foregone conclusion – it must be assumed that all the PAPs will be reframed in mandatory language, both as to compliance with their general provisions, and also as to party obligations to engage in “ADR”, other than where very clearly defined exceptions apply.
This is available at https://www.judiciary.uk/guidance-and-resources/civil-justice-council-publishes-final-report-on-pre-action-protocols/, and is a clear, well-argued and straightforward read, and is recommended to those who want to get closer to its detailed content. This can only be a brief summary.
The report reviews and defines the proper place for pre-action dispute resolution in civil justice, making firm recommendations about the relationship between the PAPs and the CPR generally. It acknowledges that there is a degree of subsurface controversy over the extent to which courts have legitimate jurisdiction (i.e. vires) over the resolution of disputes which have not been formally issued. But it notes that there are already pre-issue procedures available, like applications for pre-action disclosure and interim injunctions; effective Part 36 offers can be made pre-issue; and, as noted above, CPR 44 specifically authorises judges to take pre-action conduct into account when determining costs orders. The Report recommends that the relationship between the PAPs and the CPR generally should be formalised, if necessary by primary legislation, by including a duty to observe the PAPs in CPR’s overriding objective[3], and thus making available to judges the case management powers under CPR3 when dealing with default in pre-action conduct or significant non-observance of PAP obligations.
The Report notes the patchy enforcement of PAP obligations hitherto and the apparent reluctance of judges to make adverse interim summary costs orders against parties who fail to observe their PAP obligations. It comes down firmly on the side of making it clear that PAP obligations are mandatory and that significant breaches should be sanctioned when they are first identified, and not adjourning consideration of sanctions until the end of a trial (which is highly unlikely ever to happen) to be considered with all other costs issues. They note that deferral of costs liability for non-compliance weakens the deterrent effect of such sanctions[4], and argue that:
there is a strong case to be made for courts being prepared to make more costs orders at an early stage of proceedings due to PAP non-compliance and its likely impact on the litigation.
Rather than setting out separately what such consequences for non-compliance might be (including whether a claim or defence might be struck out), the Report notes that wide powers already exist in CPR 3, and that with proportionate performance of PAP obligations required by the overriding objective included into CPR1, these powers, as explained in Denton, will be readily exercisable within existing judicial discretion. 14 months after the first phase report was published, powers to order mediation or other processes were specifically included in CPR 3, as from 1 October 2024[5].
During the pre-action phase, there is no access for a judge to oversee performance of PAP obligations, so the Report proposes a Notice of Default which one party can serve on the other specifying their complaint, and to which later reference can be made after issue.
The Report recommends replacing the current PD:PAC with a General PAP, covering all cases where a sector-specific PAP is absent, a very helpful draft of which is appended to the report. The Report as a whole is based firmly on the premise that the vast majority of civil claims settle already, and that the purpose of all the PAPs is to make pre-litigation settlement fully possible, based on early mutual disclosure of key information required for this to be seriously considered. A section of the Report is devoted to setting out the guidance to the General PAP, which highlights the intention of this whole review. The headlines of this are:
Step 1 Information exchange
This stage requires:
Step 2 Dispute resolution
This stage requires dispute resolution to be attempted. This mandatory requirement contrasts sharply with the current expectation that parties should “consider” dispute resolution. It does not specify the process to be utilised, but it does draw a distinction between two tiers of process, depending on whether a neutral third party is involved, such as mediation or neutral evaluation. If a DRP involving a neutral third party, such as mediation or neutral evaluation, has been used without the claim settling, parties will not obliged to use any automatically imposed process within later proceedings (though they are free to choose to do so)[6]. But if a DRP such as a joint settlement meeting or an internal complaints process which does not utilise a neutral is used pre-issue, this exception does not apply, and if the court rules or a judicial order may require it, a neutrally run process may still have to be used.
This section firmly avoids any hint that settlement is compulsory through a DRP. While it would be obligatory to use a DRP, parties are free to go to court if the dispute is not settled. The Report rejects imposition of a “good faith” obligation to try to settle, as this would be hard to define and police. Implicit in this is that courts will not enquire into the reasonableness or otherwise of any rejection of settlement terms within a DRP. Parties are free to make a choice to settle or litigate without fear of adverse consequences one way or the other.
If parties cannot agree on what process to use, they are placed under an obligation to have a pre-issue meeting to discuss this disagreement and try to resolve it, before proceedings can safely be issued. However, mediation is deliberately given a higher profile as a desirable process, neutrally run.
The draft General PAP makes it clear that correspondence about exploring settlement will remain privileged, but courts will be able to be shown correspondence about the setting up (or not) of a process and evidence that it has taken place.
Step 3 Joint stocktake
Several existing PAPs require a stocktake, although anecdotally they seem to be rare. The new General PAP will require this to be done within 28 days of disagreement. It will need to identify areas of agreement and areas of continued disagreement, together with a list of the key documents disclosed by each party by that stage of the claim, with a further list of documents sought but not disclosed and the reason why disclosure was not agreed and effected.
In fact, where a mediation fails to settle a claim, such a stocktake might well take place before the parties and the mediator go their ways, if there is enough energy and perspective available.
This was published a year after Churchill was decided, and can be found at https://www.judiciary.uk/wp-content/uploads/2025/01/CJC-Review-of-Pre-Action-Protocols-Phase-Two-Report.pdf. It looks at what is needed to update and improve most of the existing PAPs, as well as suggesting further PAPs to fill perceived gaps and reviews the impact on its thinking of the Churchill decision and the amendments to the CPR made in October 2024. Those who were expecting new drafts of every existing PAP will be disappointed. After an initial Executive Summary and a section discussing the relationship between pre-action procedures and current mandatory mediation initiatives, there is a series of summary reports produced by sub-groups which cover most but not all existing PAPs. The first of these deals with all the Personal Injury PAPs, including undifferentiated personal injury, clinical negligence, disease and illness, and package holiday claims. Further sections follow on PAPs dealing with housing, judicial review, construction and engineering, professional negligence, debt and media and communications. The only substantive new drafting relates to a proposed new PAP on multi-track litigation in the Business and Property Court, a draft of which appears in Appendix 1. This can be compared with the draft General Protocol attached to the first phase final report published in 2023, and there are clear parallels in approach between them which will doubtless provide a template for the Civil Procedure Rules Committee (CPRC) when they start the extensive task of detailed redrafting of each of the sector-specific PAPs.
Not all the existing PAPs are covered. There are no current recommendations for the updating of the PAPs dealing with possession claims relating to mortgage and home purchase schemes (the existing PAP for which is currently silent about use of any DRP); possession claims by social landlords, which encourages use of DRPs) and commercial dilapidations claims (which encourages use of DRPs but currently fails to take account of the Churchill decision, in that clause 8.3 still reads “It is expressly recognised that no party can or should be forced to mediate or enter into any form of alternative dispute resolution[7]” Furthermore, with the Renters Rights Bill under Parliamentary consideration, review of the Housing PAPs is effectively on hold.
The second phase report continues to recommend that PAP compliance entails mandatory engagement in early exchange of information, and mandatory use of a DRP, followed by a joint stocktake if settlement was not achieved by then. It asserts that their recommendations in both parts of their report are entirely in line with the newly amended CPR. Consequently they suggest that all PAPs should specifically remind parties of the court’s expectations and powers to order use of DRPs and sanction non-observance of the PAPs. They also continue to propose that parties who have engaged in pre-issue dispute resolution managed by a third party neutral should not be subject to a later such process where it is imposed automatically. In fact, the only automatic scheme for mediation is currently for small claims, so participation in any type of DRP pre-issue would currently not prevent a court from ordering use of any DRP post-issue, except for small claims.
The second phase report points out that courts still could order further use of a mediation if they thought it would help. They suggest that this might be considered if the parties seem to be “close”. Mediators would actually challenge that. If parties are far apart but face long delays and huge expense before trial of issues which are far from certain in outcome, a court might well consider helping parties avoid perceived loss of face by relieving both or all of them from being the first to propose settlement talks again. Mediation closes very large gaps, and is probably at its most useful when it does so[8].
While the CJC WG firmly recommends that the parties must be required to engage in a DRP at the pre-action stage, the second phase report again emphasises that there should be no doubt that the parties are not required to compromise their claims or defences. Their reports talk of “non-prescriptive” requirements for “ADR”. These should be understood as limited to meaning that the type of dispute resolution process to be used is not prescribed. Use of some DRP at all is not however to be optional, and in that sense is prescribed. The parties would be free to choose the DRP that best suits their needs, with a number of options to be highlighted in each PAP. In the event of disagreement there is a default requirement to hold a pre-action meeting (which can be in person or virtual including by telephone).
Further surgery is urgently required on certain of the existing PAPs, urgent because what they say has been rendered positively wrong by the Churchill decision, and also because such changes really cannot properly wait the further deliberations and drafting of replacement PAPs by the CPRC. As noted above, there is in the second phase report a single sub-group report about injury claims of all types, covering four different current PAPs. Each of the four still contains a rubric – much criticised over the years – which has been overturned by the Churchill decision. For instance the Personal Injury PAP currently reads:
9.1.3 If proceedings are issued, the parties may be required by the court to provide evidence that ADR has been considered. It is expressly recognised that no party can or should be forced to mediate or enter into any form of ADR but unreasonable refusal to consider ADR will be taken into account by the court when deciding who bears the costs of the proceedings.
The PAPs dealing with clinical negligence, disease and illness and package holiday claims all contain the same sentence, as does the commercial dilapidations PAP. That formula has never been entirely accurate anyway, in the light of Dunnett v Railtrack and many subsequent cases where costs sanctions have been imposed for unreasonable failure to mediate. But there can be no doubt about its erroneousness now. It is an embarrassment that this sentence should still appear in authoritative documents like PAPs when it is not merely a misleading expression of mixed opinion and advice but now positively wrong in law. This situation rather underscores another plea from the Injury Claims sub-group that it should be possible to update the PAPs much more speedily than hitherto, but maybe it also betrays a resistant attitude of mind to “ADR” in this sector.
One further recommendation from the CJC WG’s first phase report is worth noting again, as it reappears in the Construction and Engineering sub-group report, and is clearly intended to be of general application in all sectors. This involves the extent of confidentiality applicable to setting up “ADR” processes:
4.24 The court should not be shown any communication, or part of a communication, disclosing the substance of negotiations between parties engaged in a dispute resolution process. However, the guidance to the obligation specifies what information can be disclosed for the purposes of demonstrating compliance with the obligation, such as invitations to engage in a dispute resolution process, and responses thereto, and evidence that a dispute resolution process has taken place.
So communications about the setting up (or not) of any settlement process – as opposed to the content of any such meeting, which would remain privileged – would not be subject to without prejudice privilege, to ensure that unreasonable refusal could not shelter behind an assertion of privilege, even if in correspondence marked “without prejudice”. This may simply reinforce the view taken by judges over the admissibility of preparatory conversations when invited to consider the unreasonableness or otherwise of a party’s approach to dispute resolution. But it is important to have the position spelt out clearly in PAPs.
The sub-group reports discuss (mostly) further specific considerations for the CPRC when redrafting their respective sector-specific PAP. These range from enthusiastic endorsement of the usefulness of further deployment of DRPs in their sector[9], through a cautious of the right of experienced parties to agree in writing that PAP requirements might be waived[10], to a thinly disguised lack of interest and enthusiasm about embracing change which simply notes that Churchill may make a difference[11]. Apart from in clinical claims, there has never been much enthusiasm for mediation in this sector, and it will be interesting to see whether the courts will compel a change of approach.
The CJC WG must have felt huge relief that they did not have to do all the drafting for the revised PAPs. That task is the responsibility of the Civil Procedure Rules Committee to perform or at least manage. They do have the draft General Protocol from the first phase report and the Business and Property draft PAP from the second phase report as useful templates, but much needs to be done to adjust each PAP to the needs of each respective sector.
Sadly this probably means a considerable time before firm drafts will emerge, bearing in mind the huge workload of the CPRC. Perhaps the CPRC will sub-contract some of the drafting, though it should check the mindset towards change of each group asked to do such drafting. There is surely a case for the CPRC to break the task down into two parts – urgently amending the existing Injury and Dilapidations PAPs to make them Churchill-compliant by deleting the wrong rubric over the court’s powers – and then drafting the new PAPs consistent with the CJC WG’s recommendations, dealing with all and not just most of the existing PAPs, and adding the new General and Business and Property PAPs. The latter will reduce the need to rely on the former, as the main body of work hitherto not covered by a specific PAP has been commercial claims. Interestingly, being framed as a claim in private nuisance, Churchill v Merthyr Tydfil CBC happened to be one such case which would have been caught only by the proposed General PAP. What percentage of issued claims will only be similarly caught by a General PAP is not clear. However, even if not often directly invoked, it serves as a useful template of the right basic pre-action policy approach against which to measure revision of the specific PAPs
The CPRC might also give immediate consideration as to whether the Overriding Objective needs to have PAP compliance spelt out. The effect of the October 2024 amendment of CPR 1 to include “ADR” was probably the most dramatic and effective move made in response to Churchill. To emphasise the important of compliance with PAPs in this overarching way would do much in the interim to confirm the inevitable direction of travel before detailed PAPs can be drafted, agreed and implemented.
[1] In view of the continuing inappropriateness of the acronym Alternative Dispute Resolution (ADR) and the lack of agreement over any substitute, this article will use the acronym “DRP/s” to refer to all types of process mentioned in PAPs and the CPR, except where a report or judgment actually uses “ADR”.
[2] Three months before Churchill but just over a year after the CJC’s report Compulsory ADR emerged and sanctions at the first CCMC from judges now fixed with unarguable responsibility to promote use of DRPs in claims which proceed to issue.
[3] Perhaps primary legislation will not be required, in the light of the CPRC’s effortless amendment of CPR 1 in response to Churchill
[4] There are hitherto very few examples of enforcement or sanctioning of failure to observe PAP obligations, perhaps because of the less than mandatory terms in which they have been currently expressed.
[5] The court already has powers to order and assess costs summarily and to order immediate payment – CPR 44 and its Practice Direction
[6] But the only automatic dispute resolution scheme at present is for small claims
[7] This is a rubric which still appears in all the Injury PAPs despite the Churchill decision which makes it entirely erroneous. This is commented on further later.
[8] A vivid illustration of the truth of this is to be found in the very recent case of DKH Retail v City Football Group [20254] EEWHC 3231 (KB), in which parties were close to trial in a hotly contested trade mark dispute. DKH suggested a mediation but City opposed this. The judge decided to order a short sharp mediation and the BAILII judgment reports that settlement was achieved.
[9] In relation to the Media and Communications PAP
[10] In relation to the Construction and Engineering PAP, an approach also suggested by the draft Business and Property draft PAP
[11] In relation to the four Injury PAPs. There is not even an acknowledgement of learning derived from the eight years of experience of mediating clinical claims through the NHS Mediation Scheme, let alone any acknowledgment that as currently drafted they all talks of “ADR” in terms rendered completely wrong by Churchill.